Sony announced solid results for the last quarter of 2005. Sales were up 10% and they posted a reasonable profit versus a loss the year earlier. Howard Stringer must be sighing a sigh of relief. Or is he?
Sony’s ailing consumer electronics division recovered, with sales rising 4.7% and operating income jumping 56%. The business benefited from buoyant demand for its Bravia flat panel LCD TVs, which helped it to emerge as the global leader in LCD TV sales on a value basis.
Games were also a strong performing category, with sales of PlayStation 2 and PSP, its handheld console, doing particularly well. The games division enjoyed a 48% rise in sales in Sony's 3rd quarter and a 59% increase in operating profits.
So, that was the good news. The bad news was that their financial services division performed best of all of them. This is bad because it is no longer a strategic division at Sony. They have committed to spin it off soon.
The other bad news is that the Walkman division is still getting walked all over by Apple's iPod. Their sales were flat on the year earlier. And Sony's movie division had an awful year. Producing a run of flops.
So, the best Sony could do was to announce a cautious outlook for 2006 and so they should. They'll have to pray for some box office success in their movie division, try to take some market share back from the all-powerful iPod (yeah right!), try and get the Playstation 3 out early and pray like mad that flat panel TV prices don't tank.
So, Sony still has a long way to go before Stringer and his team can even think of celebrating any kind of turn around. 2006 will be critical for them.
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